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• Monday, December 4, 2006 08:47 PM

  I think you are mixing apples and oranges

  Look at it from the point of view of Chinese trade negotiators. … for China to agree to demands … in the context of a trade deal, would undoubtedly be seen as a concession that would have to be matched by an equal concession from the United States.

  You are so right about this… but I think you …or your sources anyway, are wrong about this:

  …The law is a carefully constructed attempt to redress the accelerating inequities caused by China opening up its labor force for the world's exploitation. …has come under sustained, vociferous criticism from U.S. employers operating in China who declare that it will raise their costs of doing business …

  Granted, I did not read the article by Mr. Brown yet. Nevertheless, the first problem is that you are now putting two very separate issues together: compliance in outsourcing (the Newsweek article) , to compliance of multinational companies’ Chinese operations to Chinese labor laws. The first issue is really about how Chinese companies get around the law and fool foreign auditors. The second issue is about how the new regulations will affect MNCs’ own manufacturing and sales operations in China. The above quote is about this second issue.

  Most WESTERN multinationals in China have excellent wage levels, working conditions, and environmental protection procedures. They have to because of two reasons: they come under much more scrutiny from Chinese regulatory agencies; and they need to try to instil their own corporate values into the Chinese management class in order to maintain international levels of productivity.

  The laws now are unfair in there implementation…this therefore allows corruption and exploitation in Chinese companies. It’s a lot easier to audit a US-based company which employs 500 people in a highly-automated, lean factory, than say, a private Chinese company which employs 10000 people, and who’s GM is definitely connected into the local Party power structure (they are always connected because that is the only way they can get capital from the state-controlled banks)

  I asked many expat business leaders, including the head of the American Chamber of Commerce in Beijing (Amcham), about the new proposed laws. They are against the proposed laws, but not because they want to continue to “exploit” workers. And they think that, generally, they think that Amcham and US businesses are getting a very bad rap in the press for their stance on this issue. They are against these proposed laws because:

  • The laws strengthen the power of Chinese labour representatives…in other words, strengthen the power of the old CCP cadre who are assigned to larger factories by the CCP.

  • The laws would give worker committees (lead by CCP labour representatives) the authority to edit and approve the employee handbook.

  • The laws would make it much more difficult to fire people and stipulate much higher costs for severance packages. Note here that China job-security environment is not like the US. Companies today cannot easily fire or layoff people. Additionally, corruption is rampant in most companies here – foreign, state-owned, and private. And management quality is at a much lower level than in the West. So, with the introduction of the new laws, company managers fear they will lose the ability the change their managers. And if they do not have the ability to fire people for bad performance, they lose the ability to enforce quality standards.

  • Lastly, everyone knows that the new laws will only be applied to foreign-owned companies.
  —jesse_covner Read jesse_covner's other letters
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